The Federal Budget and Typical American Families – A Toadish Analogy
The worst part is not that President Obama has recently forfeited the rhetorical war with Republicans by adopting their tired trope–like regular families are tightening their belts during this recession, the federal budget needs to, as well–but that the analogy is horribly wrong. Their are probably no two entities that technically have budgets that are less alike than the United States Federal government and a typical American family.
People know they will grow old, retire and die. National governments plan to exist in the future – A married couple knows they have a more-or-less set life span. They will get older, weaker and less able to work. They should run a financial surplus only during their middle age to pay for a set retirement period when they will plan on running a deficit. National governments, on the other hand, don’t retire. They actually need to plan on continuing to exist well into the future. And they should expect their countries to always be getting progressively more advanced and wealthy.
Families can’t print money. Our government can – Obviously, when you are the one who can print the dollars, it changes radically what it means to owe someone else more dollars.
Families don’t actively need to choose to reduce the money they take in, but our government does – Perhaps the biggest difference that makes this analogy beyond absurd is that most families can’t independently choose to simply increase or decrease their revenue, unlike the government, which has the power to raise or lower taxes. In fact, the main reason we even have a midterm budget deficit problem to “worry about” is because we expect the federal government to actively take huge steps to reduce the government’s revenue by over $4 billion by extending the Bush tax cuts.
Please find me the “typical American family” that is seriously concerned about cutting their budget because it plans for no reason to actively take steps to make itself poorer in two years.
Playing on psychology to discount taxes as a solution
I know this analogy appeals to politicians who want to force “tough choices,” i.e. cuts to poor people who are not them, instead of tax increases. It inherently plays on the fact that most typical families can’t easily increase their salaries, and so almost always need to look to cuts to deal with their budget problems. The analogy helps to obscure that the government does have the simple option to raise its income through taxes.
If a politician said, “Times are tough, so the government needs to behave like a Sonoran Desert Toad; just like a toad during the dry season burrows into the ground and does nothing until it starts raining, during our economic dry season, the government should totally shut down until the economy grows again,” you would think they were crazy. But the reality is that the hugely complex federal government probably has about as much in common with a Desert Toad as it does with a typical family budget. Analogies can just as often be used to spread horribly false impressions as they can be used to explain something.